New Contradictions in Cuba with the Development of Cooperatives

Vincent Morin Aguado

HAVANA TIMES — Cooperatives are now being formed in Cuba in the service sector, which includes transportation, plus some productive sectors such as fishing and construction. Agriculture was the traditional area in which cooperatives existed, and now even these have greater autonomy from government control.

However contradictions are beginning to emerge between cooperatives and the small private companies of “self-employed workers” that were created months ago in the area of food services and other retail activities.

What’s on the horizon is an apparent struggle over market shares between these two competing forms of organizing work.

Individual self-employed workers are today experiencing the “adventures” of cafés, restaurants, small shops with various retail goods, stands where they sell a whole host of difficult to imagine articles and even the many mobile street-vending operations, with traders planted behind their push-carts.

These risk-taking business people pay high taxes, including those related to their income and their own retirement, along with those of any employees they might have. They improvise because their only assets are their homes, the sites authorized by municipal authorities for them to sell their goods, or the mode of transportation they might use to get around the city every day hawking their wares.

Now, the emerging cooperative system will be based on the leasing of premises that were previously sites of generally economically inefficient state-owned businesses, which were also highly criticized for the poor quality of services they provided.

The difference between these facilities and those of the self-employed is that these are properties that have been in existence for a long time (most of which were built before the revolution), are well located, and the quality of their construction meets commercial standards – though many look bad at first sight.

It’s naive to believe that these retail cooperatives won’t have financing for their activities. The cooperatives will be, preferably, people who previously worked in those establishments, although arrangements will be made to find financiers if one doesn’t exist among themselves or their families.

Such family members could include the over a million Cubans who live abroad, many of them established there for years, especially in the United States. Several thousand dollars or euros isn’t too much on the other side of those borders and here those funds could serve to renovate those business sites, buy merchandise and initiate a next stage of work.

Also, Western Union allows the direct and insured transfer of dollars from the US. Likewise, there’s no shortage of banking connections between the island and Europe to perform similar transfers of funds, not forgetting family visits or the well-known “mulas” (mules).

It will ultimately be safer to invest in a cooperative. These will be situated where there were previously a small state-owned cafeteria, for example, rather than one run out of one’s own living room, sacrificing the family’s living space, in addition to the difficulties in adapting one’s home to so-called “marketing requirements.”

Particularly in food services, the products for selling are similar for cooperatives and self-employed workers (with the differences explained above, obviously favoring cooperatives).

It will be impossible for the government to ignore the hundreds of thousands of workers who will transition into cooperatives, though for years they were its faithful and stoic workers paid extremely low wages. In fact, today many of them are close to the retirement age.

What will the current Ministry of Domestic Trade do with the substantial allocation of centralized resources, generally wasted so far, that were supposed to go to those establishments that will soon host cooperatives?

It’s evident that many of the current “self-employed workers” will go under in the competition with this new form of economic partnership. Those who will prevail are the ones who have the advantages of good locations and facilities where they live, financing and of course creativity as business operators.

In the end we will have many people winding up disappointed, closing their small businesses after having started them with so much effort and hope.

How will the socialist state respond? The prevailing situation and its consequences are the result of government policy over the past fifty years. Don’t forget that this is a system that has not given up on seeing itself as the representative of all workers, with a single party aiming to act as a guarantor of the political organization of society.

We’re talking about hundreds of thousands of private self-employed workers with the number of cooperative members that will exceed those by twice the number.

The expansion of autonomous and collective production associations as a new economic sector is a necessity given the failed state management of small and medium-sized enterprises for over four decades. This step forward is inevitable – as are the contradictions that will emerge.
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To contact Vincent Morin Aguado, write: [email protected]